How many of these days may I deduct?

Answer: Your trip to the Bahamas triggers three sets of tax rules:

The North American area test

The foreign travel transportation rule

The daily test for a deductible business day

The Bahamas are in the defined "North American area" for purposes of traveling to and deducting continuing education courses. This makes things easy, as you trigger none of the extra rules that apply to a meeting that occurs outside the North American area.

Although your trip is in the defined North American area, you are traveling outside the 50 United States, and that triggers the foreign travel rules. Because your foreign trip is for more than one week, excluding the day of departure, you are subject to the more than 75% business purpose test.

Under this foreign travel test, if more than 75% of your days are days of work, you may deduct 100% of your airfare and other costs of getting to and from the Bahamas. If your work days fail this test, then you deduct a pro rata portion of your transportation costs, based on comparing the number of business days to the total trip days. In your case, you have nine total days; thus, you may deduct all your transportation costs.

The final test applies to your costs of sustaining life for each day of the trip. If a day is a business day, you deduct your costs for food, lodging, and other expenses of sustaining life. The expenses you incur on Sept. 13 to travel to and park at the airport are transportation costs deductible under the transportation rules. Meals, snacks, and sundries purchased at, or on the way to, the airport are deductible as sustaining-life expenses on Sept. 13.

Sept. 14 is a travel day and your food, lodging, and other sustaining-life expenses are deductible for that day.

Sept. 15 is your business travel recovery day. Since you took an all-night trip to the Bahamas and incurred a three-hour adverse time change, we think that your travel recovery day is a logical business day to enable your studies at your continuing education events. If an event starts at 8:00 a.m., that's 5:00 a.m. San Francisco time. You reasonably need brain-adjustment time before the meetings.

By attending sessions Sept. 16–19, you easily qualify those days as continuing education days for which you deduct your food, lodging, and other costs of sustaining life.

Your snorkeling and dinner on Sept. 20 qualify as associated entertainment. Your other Sept. 20 expenses are deductible as costs of sustaining business life on the road.

You deduct the food and snack part of your Sept. 21 return as sustaining-life costs and the taxis, parking, and airfare as transportation costs.

You have planned your trip well. We found only business deductions in your setup. Good work!

Calculating Business Travel Expenses

Question: I am planning a trip to Nassau in the Bahamas. Details of this trip are:

Sept. 13

Sept. 14

Sept. 15

Sept. 16

Sept. 17

Sept. 18

Sept. 19

Sept. 20

Sept. 21

Depart San Francisco 11:20 p.m.

Arrive Nassau, Bahamas 12:25 p.m.

Recover from overnight flight

Attend continuing education class (longer than four hours)

Attend continuing education class (seven hours)

Attend continuing education class (eight hours)

Attend continuing education class and network with attendees (10 hours)

Snorkel with continuing education class attendees, followed by dinner with this same group

Separt Nassau and return to San Francisco